Citizendia
Your Ad Here

A secured loan is a loan in which the borrower pledges some asset (e. A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. In lending agreements collateral is a borrower's asset that is Forfeited to the lender if the borrower is insolvent—that is unable to pay back the principal and interest on The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower. In Finance, default occurs when a debtor has not met its legal obligations according to the debt contract e From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations The bundle of rights is a common way to explain the complexities of Property ownership The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may satisfy the debt against the borrower rather than just the borrower's collateral. In Finance, unsecured debt refers to any type of Debt or general obligation that is not collateralized by a Lien on specific assets of

Contents

Purpose

There are two purposes for a loan secured by debt. In the first purpose, by extending the loan through securing the debt, the creditor is relieved of most of the financial risks involved because it allows the creditor to take the property in the event that the debt is not properly repaid. A creditor is a party (eg person organization company or government that has a claim to the services of a second party In exchange, this permits the second purpose where the debtors may receive loans on more favorable terms than that available for unsecured debt, or to be extended credit under circumstances when credit under terms of unsecured debt would not be extended at all. In Economics a debtor is simply an entity that owes a Debt to someone else the entity could be an individual a firm a government or an organization A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent In Finance, unsecured debt refers to any type of Debt or general obligation that is not collateralized by a Lien on specific assets of Credit is the provision of resources (such as granting a Loan) by one party to another party where that second party does not reimburse the first party immediately thereby generating Credit is the provision of resources (such as granting a Loan) by one party to another party where that second party does not reimburse the first party immediately thereby generating In Finance, unsecured debt refers to any type of Debt or general obligation that is not collateralized by a Lien on specific assets of The creditor may offer a loan with attractive interest rates and repayment periods for the secured debt.

Types

One popular type of secured loan that is normally only available at a bank or credit union is the savings secured loan. In this type of loan, the borrower must have a savings account with the creditor. A portion of the money in this account is used as collateral to secure a loan equal to the amount pledged. This money is then frozen in the account but continues to earn interest. As the loan is repaid the secured portion of the savings account is freed. This has advantages for both the creditor and the borrower. If the borrower defaults on the loan the collateral is already in the creditor's possession so it is a very low risk. As a result, the creditor usually offers a much lower interest rate. The disadvantage of this type of loan is that it is limited by the available fund in the savings account.

A mortgage loan is a secured loan in which the collateral is property, such as a home. A mortgage is the pledging of a property to a Lender as a security for a Mortgage loan.

A nonrecourse loan is a secured loan where the collateral is the only security or claim the creditor has against the borrower, and the creditor has no further recourse against the borrower for any deficiency remaining after foreclosure against the property. A nonrecourse debt or non-recourse debt or nonrecourse loan is a Secured loan (debt that is secured by a pledge of collateral, typically

A foreclosure is a legal process in which mortgaged property is sold to pay the debt of the defaulting borrower. Foreclosure is the legal proceeding in which a mortgagee, or other Lienholder, usually a lender obtains a court ordered termination of a mortgagor

A repossession is a process in which property, such as a car, is taken back by the creditor when the borrower does not make payments due on the property. Repossession is generally used to refer to a Financial institution taking back an object that was either used as collateral or rented or leased in a transaction Depending on the jurisdiction, it may or may not require a court order.

United States Law of Debt Secured by Property

In the case of real estate, the most common form of secured debt is the lien. Real estate is a legal term (in some jurisdictions notably in the USA, United Kingdom In Law, a lien is a form of Security interest granted over an item of Property to secure the payment of a Debt or performance of some other Liens may either be voluntarily created, as with a mortgage, or involuntarily created, such as a mechanics lien. A mortgage is the pledging of a property to a Lender as a security for a Mortgage loan. A mechanic's Lien is a Security interest in the Title to Property for the benefit of those who have supplied labor or materials that improve A mortgage may only be created with the express consent of the title owner, without regard to other facts of the situation. A mortgage is the pledging of a property to a Lender as a security for a Mortgage loan. In property law the title owner the one holding the greatest number of rights or most important rights in a piece of Real estate. In contrast, the primary condition required to create a mechanics lien is that real estate is somehow improved through the work or materials provided by the person filing a mechanics lien. A mechanic's Lien is a Security interest in the Title to Property for the benefit of those who have supplied labor or materials that improve Real estate is a legal term (in some jurisdictions notably in the USA, United Kingdom Manual labour (or manual labor) is physical work done with the hands especially in an unskilled job such as fruit and vegetable picking road building or any Materials are physical Substances used as inputs to production or Manufacturing. A mechanic's Lien is a Security interest in the Title to Property for the benefit of those who have supplied labor or materials that improve Although the rules are complex, consent of the title owner to the mechanics lien itself is not required. In property law the title owner the one holding the greatest number of rights or most important rights in a piece of Real estate. A mechanic's Lien is a Security interest in the Title to Property for the benefit of those who have supplied labor or materials that improve

In the case of personal property, the most common procedure for securing the debt is described through the Uniform Commercial Code or UCC. Personal property is a type of Property. In the Common law systems personal property may also be called chattels or personalty. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations The Uniform Commercial Code ( UCC or the Code is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of This statute provides a system of forms and public filing of documents by which the creditor's interest in the property is made known. A statute is a formal written enactment of a Legislative authority that governs a Country, State, City, or County. A creditor is a party (eg person organization company or government that has a claim to the services of a second party Property is any physical or virtual entity that is owned by an individual

In the event that the underlying debt is not properly paid, the creditor may decide to foreclose the interest in order to take the property. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations A creditor is a party (eg person organization company or government that has a claim to the services of a second party Foreclosure is the legal proceeding in which a mortgagee, or other Lienholder, usually a lender obtains a court ordered termination of a mortgagor Property is any physical or virtual entity that is owned by an individual Generally, the law that allows the secured debt to be made also provides a procedure whereby the property will be sold at public auction, or through some other means of sale. The law commonly also provides a right of redemption, whereby a debtor may arrange for late payment of the debt but keep the property. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations

How to create secured debt

Debt can become secured by a contractual agreement, statutory lien, or judgment lien. A contract is an exchange of promises between two or more parties to do or refrain from doing an act which is enforceable in a court of law Contractual agreements can be secured by either a Purchase Money Security Interest (PMSI) loan, where the creditor takes a security interest in the items purchased (i. e. vehicle, furniture, electronics); or, a Non-Purchase Money Security Interest (NPMSI) loan, where the creditor takes a security interest in items that the debtor already owns.

See also


External links


Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their Creditors Creditors may file a bankruptcy petition against A car title loan, or simply title loan, is a Loan where the Borrower provides their car as Collateral. Second Lien Loan (or last-out participation is a form of Loan with a security interest in the Assets of a company that are second in ranking In Finance, unsecured debt refers to any type of Debt or general obligation that is not collateralized by a Lien on specific assets of In Finance, senior debt, frequently issued the form of a senior note, is debt that takes priority over other debt securities sold by the issuer In Finance, subordinated debt (also known as subordinated loan, subordinated bond, subordinated debenture or junior debt) is debt In Finance, seniority refers to the order of repayment in the event of Bankruptcy.
© 2009 citizendia.org; parts available under the terms of GNU Free Documentation License, from http://en.wikipedia.org
 Dapyx Software network: MP3 Explorer | Ebook Manager | Zenithic